Since the pandemic began, most people have spent more time at home than before. As a result, more people have wanted to improve their homes! Home improvements create more functional, comfortable, and enjoyable living spaces. Finishing the basement has become a popular home renovation over recent years.
If you have an unfinished basement, you have some significant square footage to work with and can expand your home’s living space. Basement developments are also more affordable than a home addition or similar above-ground home renovation. When it comes to useable space, you get a lot for your money.
So, how much value does a basement renovation add in Canada? There are a few things to consider. The size of the space, how you choose to finish it, your basement renovation company and market conditions can play into the cost of the basement and its return on investment (ROI).
The data on the cost vs. value of finished basements
The cost vs. value of your basement development project might vary from another, but there is data available to give you a ballpark idea of the return on investment. Based on the data available, you can expect to get back about $700 for every $1,000 you spend on your basement.
Remodeling Magazine provides cost. vs. value data on popular home improvement projects. Their report states that a midrange basement development can recover about 70% of the price. So, if you spend $70,000 on a basement finishing, you can add $50,000 to the value of your home. That’s an excellent return on investment compared to other interior renovations.
The basement renovation in their example included a three-piece bathroom and large living area with a kitchenette and wet bar. It included everything from framing, drywall, electrical, plumbing, insulation, painting, lighting, flooring, and more. It was a complete basement finishing job with quality materials, but nothing overly luxurious.
How will appraisers calculate the value of your basement?
Typically, all below-grade renovations will bring a smaller ROI than above-grade remodels. For example, appraisers might value your below-grade space at 70% of what an above-grade space appraisal would bring. So while the basement space is still considered valuable, it won’t be as valuable as what you have upstairs.
However, some finished basements will be more valuable than others. Consider egress points, number of windows, types of finishes, and bathroom additions. Here are something that appraisers take into consideration when determining value.
How deep is it below grade?
You might notice that home’s on real estate websites will mention the total square footage, excluding the square footage of a below-grade basement. Or you might see that it has 3+2 bedrooms. Why don’t they say five bedrooms? Those additional two are below grade, and might not have proper windows to be considered a legal sleeping space. It’s common practice not even to consider the basement’s square footage in a listing, but that doesn’t mean it doesn’t factor into the price of the home.
If your basement is as large as your home’s footprint but with no door leading directly outside without climbing stairs, it’s considered below-grade. Below-grade basements are appraised a little lower than a walk-out basement. However, you can increase the value of your basement by adding windows or increasing window sizes downstairs.
Walk-out basements are either all or partially above ground, are considered more valuable than below-grade basements. They offer an additional exit through a ground-level door, essential for safety and convenience. In addition, a walk-out basement usually has more natural light and doesn’t give the feeling of being underground. As a result, people generally like walk-out basements better. You can enhance a walk-out basement with a patio or living space outside the entry doors. That is even more appealing to potential buyers.
How does your home compete on the local market?
Your location, market conditions and your home’s performance on the market overall will also contribute to the value of your basement. An elaborate basement with high-end finishings, superior home theatre systems, and other luxury additions might not have a high ROI if your home’s value and the current market value are lower.
For example, a $150,000 basement development on a home valued at $350,000 on the market won’t recoup as much of its cost compared to a less expensive renovation. So how much do you spend? Talk to your basement renovation contractor and a local real estate professional. Both can help you determine a basement development budget that will provide what you need for the living space with the highest return on investment.
If you live in a luxury home, it makes more sense to complete the basement to match the rest of your home. A high-end basement development will match your home’s value and market position. Dollar for dollar, you could see a higher return on investment in this instance.
What factors can impact the ROI of your basement development?
If you’re asking how much value does a finished basement add in Canada, here are factors to consider:
Your local and current real estate market
The real estate market consideration was touched on before, but where you live can significantly impact your basement renovation’s ROI. Your unfinished basement won’t compete if you live in a neighbourhood where finished basements are common. In this market example, a finished basement will have a higher ROI. On the other hand, if you’re in a market where unfinished basements are commonplace, you might not see as high an ROI.
You should consider the value of attracting home buyers, though. Even if you don’t see as much cost recovered at resale, a finished basement can help it sell. It will attract more buyers and help you sell your home faster and at a more desirable price.
How you renovate the basement
Be thoughtful when designing your basement remodel if you’re renovating for maximum ROI. A finished basement with more open spaces will be more valuable than one with many closed-off rooms. An open plan will make the basement use more flexible and appeal to more people. Including an open space, one bedroom, and a bathroom will offer greater potential use to the masses.
For example, buyers that have young families or plan to age-in-place might not appreciate a custom home fitness area or sports bar-themed man cave. While these ideas can enhance your lifestyle, they won’t bring as high ROI. However, that doesn’t necessarily mean you shouldn’t renovate your basement to meet your personal needs!
The materials you use
Like any renovation, the materials you use will play into the basement’s value and return on investment potential. Experts recommend a middle-of-the-road approach when choosing basement renovation materials and features. It doesn’t need to be as high-end as your upper level, and modest is usually fine for downstairs. Instead of splurging on luxury items, you’ll save money upfront and increase ROI by investing in practical and durable materials.
Natural light
While there is only so much you can do, the more natural light you can bring into the basement, the better value. You can bring in that natural light if you add windows or replace small windows with larger ones and large deep window wells. It also provides additional emergency exits, which are vital for the basement.
If adding windows isn’t an option, have your electrician provide a quality electrical lighting plan. It should include ambient lighting with recessed fixtures, cozy task lighting, and accent lighting to warm up the space.
Can you build a secondary suite?
If you don’t need the space and increasing value is a priority with your basement development project, consider building a legal secondary suite. A secondary suite will bring in a steady income from renters. You can use that money to pay your mortgage or other living expenses. Homes with legal secondary dwellings are also more valuable in the real estate market. When it comes time to sell, you’ll attract real estate investors and receive more for your home overall.
A finished basement will add value to your lifestyle
We can talk about return on investment, appraisals, and monetary values, but what about the value a basement development adds to your lifestyle? The enjoyment of your home has great significance, and you should factor it into your decisions when finishing the basement.
With a basement remodelling project, you can almost double your family’s living space. Imagine the potential that square footage presents! It can mean a comfortable family room for movie and games nights. A spare bedroom for visitors or a private home office if you work remotely. Your basement renovation can give you a hobby room, exercise room, playroom, and all kinds of smart storage solutions.
What can you do with your finished basement?
We touched on a few ideas, but an unfinished basement is like a blank canvas with so much potential! Your basement renovation team can help create a basement design plan that best suits you and your family’s needs. Here are some common basement renovation ideas:
Bedrooms for a growing family
If your family has outgrown the main floor, but you don’t want to move, your basement is the answer. Include one or more bedrooms downstairs for those big kids and teenagers. Bedrooms are very flexible spaces and can accommodate your family as your needs change. When the kids move away from home, those bedrooms can become a guest room, home office, hobby workshop, or anything else you want.
Add a bathroom
If you have the space, add a bathroom in your finished basement. A bathroom downstairs will make being in the basement more convenient and comfortable. Plus, basement bathroom additions are more cost-effective compared to upstairs additions or adding to your home’s footprint.
A space for recreation and entertainment
Your basement provides ample space for, however, you like to spend your free time. Create a comfortable family room, an elaborate home theatre, games room, or sports-themed bar downstairs. There can be room for a pool table, games, and other entertainment in the basement.
If you’re interested in individual fitness, a basement fitness room will give you the enjoyment and convenience of working out at home. You can also build an area for making art, sewing, or any other hobby downstairs.
Dedicated home office
If you’ve transitioned to working from home, you need a dedicated space for that. Boost productivity and include a private home office in your basement development plans. Your office should have proper lighting, including natural light, and a door that closes so you can focus on your work when others are at home. You can also plan additional outlets to accommodate your computer, printer, device chargers, and other office equipment.
A space for the kids
There are many benefits to having a space for the kids downstairs. They can have the freedom to play freely (and loudly), with all their favourite things in a bright play area. Your kids will also enjoy watching movies, playing video games, and doing other activities in their own dedicated space. It keeps them happy, a space for all their toys, and the noise and clutter downstairs!
In-law suite
If you have a multigeneration family at home, your finished basement can make things more comfortable. For example, your basement development could include a living room, small kitchen, bathroom, and a bedroom for your in-laws or adult children. A suite allows everyone to have their privacy and independence while still enjoying living together in the same dwelling.
Finding a basement development company
Finishing your basement will be a significant undertaking and investment. You want to ensure you’re getting the most value and the highest return on investment. It is also critical that the contractor does the work correctly. They must obtain permits, follow building codes, and provide results that you’re proud of.
Home renovations can bring stress, but they don’t have to. When you work with an experienced and trustworthy basement renovation company, the entire process will run more smoothly. They’ll provide transparent quoting, professional design services, open communication, and take care of managing the whole project for you.
Not sure where to start looking? RenovationFind can help. We offer a free online directory of pre-screened and vetted home improvement companies, trades, and contractors – including basement development companies. Every company on our list has passed a stringent screening process. Each has a proper business license, insurance, WCB coverage, and a clear financial and legal history. In addition, we use a third-party organization to monitor customer reviews and the company. You can know they’re keeping up to standard. Companies with a membership with the BBB receive a higher rating on the website.
When you hire a RenovationFind Certified company, you are hiring a company you can trust. They will help you plan your basement development and ensure features for the best returns financially and for lifestyle.
Finish your basement with a RenovationFind Certified company near you!
